DIRECTOR COMPENSATION

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth compensation paid to our Board of Directors in 2006 and should be read in conjunction with the narrative discussion which follows this table.

2006 Director Compensation Table

*                    See “Executive Compensation—Summary Compensation Table” for compensation with respect to Mr. Takashi Morimura and Mr. Philip B. Flynn. Mr. Masashi Oka is not included in this table or the Summary Compensation Table because he is an executive officer of UnionBanCal who was not a named executive officer in 2006 and who received no additional compensation for services provided as a director.

(1)          In 2006, Mr. Dashe deferred 50% of his retainer and meeting fees from the last three fiscal yearsdate of the President and Chief Executive Officer, the Chairman ofhis deferral election into an unfunded interest-bearing deferred compensation account. Mr. Dashe joined the Board the former Chairmanin July 2006.

(2)          In 2006, Mr. Farrar deferred 100% of his retainer and meeting fees into an unfunded interest-bearing deferred compensation account.

(3)          In 2006, Mr. Gyani deferred 100% of his retainer and meeting fees into stock units. Mr. Gyani joined the Board in July 2006.

(4)          In 2006, Mr. Havner assigned 100% of his retainer and meeting fees to the Deputy Chairman of the Board and the four next most highly compensated executive officers (other than the President and Chief Executive Officer) whoHavner Family Foundation.

(5)          Mr. Yoost served as executive officers ona director until the April 2006 annual meeting of stockholders and did not receive a 2006 grant of restricted stock units. Mr. Yoost did not have any outstanding awards of restricted stock at December 31, 2003 ("named executive officers").

(1)

Messrs. Kanari, Shimura, Hayama and Saegusa, as expatriate employees of2006. The Bank of Tokyo-Mitsubishi, Ltd., are not eligible to receiveamount set forth in the Stock Awards column for Mr. Yoost reflects the 2006 compensation expense for his 2005 restricted stock awards long-term incentive payments or annual bonuses to be paid in 2004 for 2003 performance. Their compensation includes amounts payable under The BankStatement of Tokyo-Mitsubishi, Ltd. Expatriate Pay Program which takes into account exchange rates, housing costs, and other related factors. Please refer to the Executive Compensation & Benefits Committee Report on Executive Compensation for additional information. The data set forth in this table for the above officers includes all compensation awarded to, earned by or paid to them from any source for services rendered to UnionBanCal Corporation and its subsidiaries.

(2)

Other Annual Compensation includes perquisites and other personal benefits, securities or property, which, in 2003, aggregated less than the lower of $50,000 or 10% of the total salary and bonus reported forFinancial Accounting Standards 123R, “Share-Based Payment” (FAS 123R).

(6)          On July 1, 2006, each person.

(3)

The value listed in the table for restricted stock awards was based on the closing market pricenon-employee director of UnionBanCal Corporation common stock at the grant date. Mr. Flynn received 6,000 restricted shares in 2003, 6,000 restricted shares in 2002 and 6,000 restricted shares in 2001. Asan award of December 31, 2003, the total number of unvested855 shares of restricted stock units under the Year 2000 UnionBanCal Corporation Management Stock Plan, with a fair market value of approximately $55,000 as of July 1, 2006. These awards held by Mr. Flynn was 15,000. Eachwill vest in full on July 1,

2007, except that the award granted to Mr. Flynn vests ratably over four yearsFarrar will vest on the anniversaryMay 24, 2007. On July 26, 2006, Mr. Dashe and Mr. Gyani, new non-employee directors of the grant date. TheUnionBanCal, received initial and regular awards of an aggregate valueof 1,800 shares of restricted stock awards,units under the Year 2000 UnionBanCal Corporation Management Stock Plan with a fair market value of approximately $110,000 as of July 26, 2006, the date of their elections to the Board. Their initial award vests in three equal one-third installments on July 26, 2007, July 26, 2008 and July 26, 2009. Their regular award vests in full on July 26, 2007. At December 31, 2003, held

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by Mr. Flynn was $863,1002006 there were no unvested awards of restricted stock. This column reflects the compensation expense accrued under FAS 123R during the 2006 fiscal year for all unvested restricted stock and restricted stock units. Compensation costs for restricted stock and restricted stock unit awards are based on the closing market pricegrant date fair value of UnionBanCal Corporation commonthe restricted stock on December 31, 2003.and restricted stock unit awards under FAS 123R, amortized over the applicable service requirement. Holders of such restricted stock awards have the right to receive dividends on the subject shares at the same rate as those paid on UnionBanCal Corporationcommon stock and holders of restricted stock units are credited with dividend equivalents in the form of additional restricted stock units. Our FAS 123R calculation assumes that the market price reflects expected future dividend streams on our common stock. If the non-employee director elected to defer his or her award of restricted stock units until retirement, this amount also includes a 15% premium. If a non-employee director who has elected to defer his or her restricted stock unit award terminates service on the Board prior to retirement, he or she forfeits the 15% premium. In 2006, all directors elected to defer their awards of restricted stock units except Mr. Andrews.

(4)

(7)          In 2006 we did not recognize any expense under FAS 123R in connection with outstanding stock options awarded in prior years. The following table provides the outstanding options held at December 31, 2006 for each director, as applicable:

Name				Number of Shares Underlying Unexercised Options
David R. Andrews					15,000
L. Dale Crandall					12,000
Richard D. Farman					18,000
Stanley F. Farrar					18,000
Michael J. Gillfillan					6,000
Mary S. Metz					18,000
J. Fernando Niebla					18,000

(8)          In September 2006, the Board of Directors, as part of its ongoing strategic planning process, held a series of meetings, working lunches and dinners in Tokyo with representatives of our majority stockholder, The Bank of Tokyo-Mitsubishi UFJ and its parent company, Mitsubishi UFJ Financial Group. In connection with the meetings, the Board believed it appropriate for each director, if he or she so desired, to have his or her spouse accompany the director on the trip. The cost of the spouse’s first class round-trip airfare to Japan and day excursions in Tokyo in which the spouse participated, and the cost of the excursion trip at the conclusion of the Tokyo meetings for the participating directors and spouses paid by UnionBanCal, as well as amounts reimbursed to the director for the payment of taxes associated with these costs, are included in All Other Compensation, and consist of the following for each affected director:

Name				Costs ($)				Reimbursement of Taxes ($)				Total ($)
Aida M. Alvarez					11,143				8,236				19,379
David R. Andrews					5,854				4,327				10,181
L. Dale Crandall					10,787				7,973				18,760
Murray H. Dashe					9,312				6,883				16,194
Mohan S. Gyani					11,143				8,236				19,379
Mary S. Metz					11,143				8,236				19,379
J. Fernando Niebla					10,484				7,749				18,233

The amounts included are calculated based on the actual amounts we paid for the participation of each director or spouse, as applicable.

(9)          Includes a matching gift of $2,500 to an educational institution on behalf of the director.

(10) Mr. Shimura is not eligible to participate in our retirement or supplemental retirement plans. See “Executive Compensation—Compensation Discussion and Analysis—Policy on Expatriate Compensation.”

(11) The following table provides additional detail regarding the compensation disclosed in the All Other Compensation column with respect to Mr. Shimura, who was a policy-making officer until February 2007 but is not a named executive officer. This information includes his salary for service as an executive officer, as well as identification of each perquisite and personal benefit he received, and quantification of each perquisite or personal benefit with a value exceeding $25,000. In addition, any item in the table below which is not a perquisite or personal benefit is identified and quantified if its value exceeds $10,000.

	Salary			Perquisites					Tax Reimbursements					Total All Other Compensation
$216,281					$	120,676	(A)			$	218,964	(B)			$	555,921

---

(A)      Mr. Shimura leased a residential property owned by UnionBanCal and made available to him at market rate, which, for 2006, was $77,113. The amount shown in the table includes a housing allowance of $70,574 as a part of The Bank of Tokyo-Mitsubishi UFJ’s overseas expatriate benefit program, which does not include the additional amount that Mr. Shimura paid out of pocket under the lease. Mr. Shimura no longer leases this residence. Other perquisites include a company car and driver, together with related insurance, fuel and maintenance; medical benefits; renter’s insurance; a portion of the cost of utility and maid service; tax preparation services and club dues. Some of Mr. Shimura’s perquisites and other personal benefits were paid or reimbursed to Mr. Shimura directly by The Bank of Tokyo-Mitsubishi UFJ, which we then reimbursed pursuant to a service agreement. In addition, perquisites and other personal benefits for Mr. Shimura reflect the aggregate incremental cost of life and medical insurance premiums provided by The Bank of Tokyo-Mitsubishi UFJ which we did not reimburse. Perquisites have all been converted to U.S. dollar amounts based on The Bank of Tokyo-Mitsubishi UFJ’s Telegraphic Transfer Buying Rate in effect at the time of the payment or reimbursement.

(B)       Tax reimbursements are reported on an aggregate basis net of all adjustments and tax refunds or liability in 2006 relating to 2005 compensation.

The following narrative discussion should be read in conjunction with the Director Compensation Table which precedes this discussion.

In September 2006, the Executive Compensation & Benefits Committee reviewed and discussed a report by Semler Brossy Consulting Group, LLC, an independent compensation consultant, on the competitiveness and reasonableness of UnionBanCal’s director compensation. This review included data on competitive practices and trends and a consideration of the responsibilities and commitments required of UnionBanCal’s non-employee directors.

Under the compensation program effective since January 1, 2005 and described below, directors who are not full-time officers of UnionBanCal or The Bank of Tokyo-Mitsubishi UFJ or its affiliates receive an annual combined retainer for service on our Board of Directors or the Board of Directors of Union Bank of California, meeting fees for attendance at board and committee meetings and annual restricted stock unit awards. New non-employee directors receive a separate restricted stock unit award after joining the Board of Directors.

Directors who are full-time officers of UnionBanCal or The Bank of Tokyo-Mitsubishi UFJ or its affiliates do not receive additional compensation for service on the Boards or Board committees of UnionBanCal or Union Bank of California. For additional information regarding the compensation of expatriate policy-making officers who are members of the Board of Directors, please see “Executive Compensation—Compensation Discussion and Analysis—Policy on Expatriate Compensation.”

Annual Retainers

The annual combined retainer for service on the Boards of UnionBanCal and Union Bank of California is $35,000. The Lead Director, whose governance role and responsibilities are broad and significant, received an additional annual retainer of $50,000 in 2006. In view of an increase in the Lead Director’s responsibilities, the Board approved an increase in the annual retainer for the Lead Director to $100,000 starting in 2007. Committee Chairs receive an additional annual combined retainer, as follows:

·       Audit Committee Chair: $25,000;

·       Finance & Capital Committee Chair: $15,000;

·       Corporate Governance, Executive Compensation & Benefits, Trust, Investment & Brokerage Oversight (a committee of Union Bank of California only), and Public Policy Chairs: $10,000; and

·       Special Committee Chairs, including the Banking Secrecy Act Compliance Committee: typically, $10,000.

All annual retainers are pro-rated and payable quarterly in advance.

Per Meeting Fees

Non-employee directors are also paid the following:

·       a fee of $1,500 for each board meeting attended, except that when board meetings of UnionBanCal and Union Bank of California are held on the same day, the total fee is limited to $1,500;

·       a fee of $1,500 for each board committee meeting attended, except that when the same committees of UnionBanCal and Union Bank of California have a combined meeting, the total fee is limited to $1,500; and

·       for Banking Secrecy Act Compliance Committee members only, a fee of $2,500 for each committee meeting attended, to recognize the amount of preparation and participation time required.

Restricted Stock Unit Awards

Each non-employee director receives an annual grant of restricted stock units with a value of approximately $55,000, subject to the terms and conditions of the grant, including the determination of the grant date, as the Executive Compensation & Benefits Committee determines. Each new non-employee director elected to the Board receives an initial grant of restricted stock units with a fair market value of approximately $55,000 on the date of election and, if the director is elected after the date of the regularly scheduled annual grant and before the end of the fiscal year, a regular grant of restricted stock units with a fair market value of approximately $55,000 on the date of election, subject to such terms and conditions of the grant as the Executive Compensation & Benefits Committee shall determine. Accordingly, each new non-employee director receives grants of restricted stock units with an aggregate fair market value of $110,000 in his or her first calendar year of service. Each restricted stock unit will be redeemed in one share of common stock. The Board based the grants on a dollar value, rather than a fixed number of employer matching, profit sharing,shares, so that the value of the grant would not automatically change with UnionBanCal’s stock price. The Board also considered the importance and difficulty of attracting highly qualified new directors in determining the value of the initial grant upon election to the Board.

Annual grants of restricted stock discount contributionsunits to non-employee directors vest on the first anniversary of the date of grant. Initial grants of restricted stock units to new non-employee directors vest in equal one-third installments on each of the first three anniversaries of the date of grant. Regular grants of restricted stock units to new non-employee directors vest in full on the first anniversary of the date of grant. Each grant of restricted stock units will vest earlier in the event of death, disability, retirement or a change of control of UnionBanCal. The Executive Compensation & Benefits Committee has previously accelerated vesting of the regular grant on a pro rata basis for the number of months the non-employee director served when the non-employee director terminated service on the Board prior to the vesting date of the regular grant.

Non-employee directors have the option to defer settlement of all or a portion of the restricted stock units beyond the vesting date. A non-employee director who elects to defer until retirement will receive an additional number of shares of common stock equal to 15% of the number of shares subject to the restricted stock units and dividend equivalents. If a non-employee director terminates service due to retirement (or death or disability after becoming retirement eligible) in 2007, but prior to the scheduled vesting date, the non-employee director will be credited with the additional restricted stock units, without regard to whether the non-employee director made a timely election to defer. If a non-employee director who has elected to defer terminates service on the Board prior to retirement, he or she forfeits the 15% premium.

As of the date on which dividends are paid with respect to common stock, each non-employee director will be credited with additional restricted stock units in an amount equal to:

·       the amount of the dividend paid on that number of shares of common stock equal to the aggregate number of restricted stock units allocated to the non-employee director as of that date,

·       divided by the fair market value of a share of common stock as of that date.

The additional restricted stock units will be subject to the same vesting schedule as the restricted stock units with respect to which they are credited. Dividend equivalents will be accrued with respect to the premium shares to which the non-employee director is entitled by reason of deferring settlement of the restricted stock units until retirement.

Deferrals of Retainers and Meeting Fees

Non-employee and non-expatriate directors may defer all or any portion of their annual retainers or meeting fees either to stock units or into an unfunded interest-bearing deferred compensation account. Non-employee directors are eligible to defer director fees and retainers for payment at a future date

designated by the non-employee directors under the Union Bank of California N.A. 401(k)Deferred Compensation Plan.

(5)

Mr. Hayama resigned Funds deferred under this Plan accrue interest based on October 22, 2003. Mr. Shimura was elected Chairmanthe average Treasury Constant Maturities Rate, calculated quarterly based on a rolling average for the previous 12 months.

In 2003, the Executive Compensation & Benefits Committee adopted a program under the Year 2000 UnionBanCal Corporation Management Stock Plan pursuant to which non-employee directors may irrevocably elect to defer all or a portion of the cash retainer and/or fee payable to them for services on the Board and its committees in the form of stock units. Stock units are a form of deferred compensation payable in shares of common stock of UnionBanCal. At the time of deferral, a bookkeeping account is established on behalf of the director and credited with a number of fully vested stock units. The director will receive a number of shares of common stock equal to the number of stock units when the deferred compensation is payable. Dividend equivalents are credited to the stock unit accounts. Stock units have no voting rights.

Review of Director Compensation

The compensation described above is the only compensation non-employee and non-expatriate directors receive from UnionBanCal. It is subject to periodic review and adjustment by the Board of Directors based on recommendations of the Executive Compensation & Benefits Committee, which engages the independent outside consultant in this regard.

Limits on Other Compensation to Audit Committee Members

Members of the Audit Committee may not receive, directly or indirectly, any consulting advisory or other compensatory fee from UnionBanCal or any of its subsidiaries, other than:

·       director fees (which may be received in cash, stock options or other in-kind consideration ordinarily available to directors);

·       a pension or other deferred compensation for prior service that is not contingent on future service; or

·       any other regular benefits that other directors receive.

Stock Ownership Guidelines

In 1999, to link the interests of non-employee directors directly to stockholder interests, UnionBanCal instituted stock ownership guidelines for its Board of Directors. Within the five-year compliance period, each non-employee, non-expatriate director is expected to own shares of UnionBanCal Corporationcommon stock with a market value of five times the director’s annual retainer, which required amount was $175,000 as of December 31, 2006. Stock ownership under these guidelines includes:

·       common stock owned personally or in trust for the benefit of these directors;

·       vested shares held in any benefit plan, including any individual retirement account;

·       unvested restricted stock;

·       non-employee director stock units;

·       restricted stock units; and

·       50% of the embedded value of vested “in the money” stock options.

Directors are expected to comply with these ownership guidelines within five years of their date of election. Each of the director nominees has met, or is on track to meet, the ownership guidelines.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

We are a California-based commercial bank holding company whose major subsidiary, Union Bank of California, N.A., effective atis a commercial bank. As used in this proxy statement, the close of business on October 22, 2003.

Stock Options

one or more of their consolidated subsidiaries, or all of them together. The following two tables summarize grants and exercisesBoard of options to purchase UnionBanCal Corporation common stock during 2003 to or by the namedDirectors has delegated primary authority for executive officers, and with respect to option grants, the per-share exercise price, the expiration date of the options, and the grant date present value of options held by such persons at December 31, 2003. The second table also provides information concerning the total number of securities underlying unexercised options and the aggregate dollar value of in-the-money, unexercised options. UnionBanCal Corporation did not reprice any options during 2003 or any prior year. In 2003, expatriate officers, including the Chairman of the Board, the former Chairman of the Board, the President and Chief Executive Officer and the Deputy Chairman of the Board, were not eligible to receive stock options. Please refercompensation to the Executive Compensation & Benefits Committee, Reportreferred to below as the “Compensation Committee” or simply the “Committee.”

Our Philosophy on Executive Compensation

It is our philosophy to compensate executive officers in a manner that promotes the recruitment, motivation and retention of exceptional employees who will help us achieve our strategic business objectives and increase stockholder value. Our executive compensation philosophy is implemented through compensation programs based upon the following principles:

·       Targeted total compensation (salary, bonus, and long-term incentives) and benefits package for additional information.executives should be positioned around median competitive levels, taking into account the relative responsibilities of the executive officers involved. Actual total compensation in any given year may be above or below the target level based on individual and corporate performance.

·       Our total compensation package should provide an appropriate mix of fixed and variable compensation to support a meaningful pay-for-performance relationship for our executive officers.

·       Performance-based compensation should be tied to performance measures believed to influence heavily stockholder value and which can be influenced by our executive officers.

·       Our long-term incentive program should be designed to encourage executive retention and link executive compensation directly to long-term stockholder interests.

·       Compensation plans should be easy to understand and communicate.

Overview of Company Policy on Executive Compensation

Our executive compensation policy and practice is established by the Compensation Committee. Specific policies and practices relating to each element of non-expatriate named executive officers’ compensation are described below. Policies for expatriate compensation, including compensation of our Chief Executive Officer, are described below under the caption “Policy on Expatriate Compensation” beginning on page 34.

The objective of our compensation policies is to provide an overall compensation opportunity that is competitive with that offered for similar positions by similar organizations among our peer group, which is discussed below. Generally, this means that base salary, annual incentive targets, and long-term incentives or stock plan grant values or target opportunities are established around the median of our peer group. Individual opportunities may be above or below this general target level at times for a variety of reasons, including performance, recruiting or retention requirements, or internal equity concerns.

Actual compensation against this generally median opportunity is determined by and designed to reward our corporate performance and individual performance. We generally structure our benefits and perquisites based on a review of typical practices of our peer group and other considerations such as our corporate culture and business strategy.

The Compensation Committee’s approach to the total pay package for the executive officers is to view the various elements of the package as a portfolio of rewards, designed to achieve different specific

purposes but to balance each other in motivating appropriate behavior, rewarding different aspects of performance or meeting corporate objectives for attracting and retaining the talent needed to successfully lead our company and increase stockholder value.

Our Peer Group

We use a group of peer U.S. bank holding companies and financial holding companies to compare the primary elements of our compensation and benefit programs for policy-making officers. The Compensation Committee periodically reviews our peer group with its independent executive compensation consultant and management, and makes changes as appropriate to better reflect companies of similar size and business characteristics. Our 2006 peer group includes 14 banking companies, many of which are drawn from the KBW Bank Index, published by Keefe, Bruyette & Woods, Inc. These represent U.S. commercial banks generally with assets between about one-half and two times our assets. These peer banks are used for comparison to our financial performance, compensation levels, program design, and program cost. In addition to the peer group comparisons, the Compensation Committee reviews broad data on U.S. banking pay practices and considers general corporate practices and trends where appropriate in making compensation decisions. The 2006 peer companies were:

Three peer companies, AmSouth Bancorporation, Regions Financial Corporation, and North Fork Bancorporation Inc., announced mergers in 2006, Compass Bancshares Inc. announced its merger in 2007 and TD BankNorth Inc. announced in 2007 plans to become a privately-held company. However, because their 2006 proxy statements filed with the SEC presented compensation and performance information for fiscal year 2005, all of these companies were included in our 2006 peer group.

The Role of the Compensation Committee and Management in Determining Executive Compensation

The Committee determines the compensation for our policy-making officers, reviews and approves compensation programs and award levels, and oversees our employee benefit plans. It also reviews compensation arrangements for the non-management, non-expatriate directors, and makes recommendations to the full Board of Directors regarding changes as appropriate.

For compensation purposes, our executive officers are divided into four groups:

·       The executive officers of UnionBanCal named in the Summary Compensation Table, who form a subgroup of our policy-making officers.

·       Policy-making officers, who are our senior executives, consisting of eleven Executive Vice Presidents and above who serve on our Executive Management Committee, plus the manager of our Independent Risk Monitoring Group.

·       Expatriate policy-making officers serving on rotational assignments from The Bank of Tokyo-Mitsubishi UFJ, our majority stockholder.

·       Other executive vice presidents and certain senior vice presidents who are not policy-making officers, but have responsibility for matters that impact the overall performance of UnionBanCal.

The Compensation Committee approves all key elements of our executive compensation and benefit programs for the named executive officers and the other policy-making officers, and oversees the design and implementation of all executive officer incentive plans, subject to stockholder approval where required or appropriate. In addition, the Compensation Committee approves corporate performance targets for executive officer incentive plans and assesses our performance results in determining awards under the plans, compared to both internal goals and peer performance. Finally, the Compensation Committee approves all salary increases, annual or long-term incentive plan targets and payouts, all equity grants, employment, severance, or change of control agreements and all benefit programs as they apply to the non-expatriate policy-making officers.

Management provides the Compensation Committee with reports on the compensation and benefits programs for officers below the policy-making level, which may include salary adjustments, bonus awards, recommendations for long-term incentive awards, benefits or perquisites. Management also may recommend to the Committee specific compensation actions for individuals or groups of officers or changes in policies or programs.

Compensation Policy Regarding Policy-Making Officers (Including Named Executive Officers)

Each element of compensation for policy-making officers is described below. Generally, the mix of pay elements, including salary and annual incentive opportunity, long-term incentive and equity opportunity, benefits and perquisites, are designed to reflect the competitive marketplace, primarily our peer group as described above. We review the mix and allocation to individuals against the marketplace regularly, but maintain a flexible policy to deliver compensation that motivates, retains and rewards our executives. In executing this policy, the Committee considers a variety of factors, applying its collective judgment where appropriate, against a frame of reference that the total pay opportunity should generally be competitive.

Base Salaries

In general, we target base salaries at the median competitive levels relative to comparable positions in our peer group, taking into account the comparable responsibilities of the executive officers involved. Where the responsibilities of executive positions are different from those typically found among other bank holding companies or where executives are new to their responsibilities or play a particularly critical role, base salaries may be targeted above or below median competitive levels. In determining salaries, the Compensation Committee also takes into account individual leadership and vision, experience and performance, as well as internal equity relative to other positions, and specific issues particular to UnionBanCal and the position involved. We believe the named executive officers’ salaries reported in the Summary Compensation Table are in keeping with this philosophy.

Annual Incentives
Option Grants

In 2006, our stockholders approved our Senior Executive Bonus Plan which contains a new annual incentive funding formula for named executive officers. This formula limits their individual annual incentive payments to 0.3% of our income before tax, excluding discontinued operations and extraordinary items. The Compensation Committee has discretion to lower actual awards below this stockholder-approved level, but not to increase them above it.

For 2006, the Committee determined the awards for the named executive officers by reference to a pre-assigned target percent of salary for each executive position, which represents what, in Last Fiscalthe Compensation Committee’s view, constitutes a generally competitive level of bonus opportunity for corporate and individual performance at target. This percentage of salary is set for each individual and position so that, along with base salary, the executive’s total cash pay opportunity will be generally around

the median of our peer group opportunity when performance also is at target. 2006 targets as a percent of base salary were 100% for the Chief Operating Officer, 80% for the Chief Financial Officer, and 60% for all other non-expatriate policy-making officers. Our Chief Executive Officer does not participate in our Senior Executive Bonus Plan.

Annual Incentive Performance Goals and Measures

At the beginning of each year, the Compensation Committee reviews our business plan for the coming year and establishes the annual performance targets for corporate performance under our annual incentive plans. Historically and in 2006, these targets are for performance measured by our annual net income and return on average equity, against internal goals based on our financial plans for the year, as established by the Compensation Committee. The annual incentive portion of total compensation is designed to reward executives for meeting these annual earnings and return on equity goals which the Committee believes are two important drivers of stockholder value. The Compensation Committee also establishes threshold and maximum performance goals and corresponding incentive funding levels. At year end, the Compensation Committee reviews our performance against both these pre-established financial goals and more judgmental strategic adjustment factors, which reflect actual achievements in such areas as quality of earnings, risk positioning and strategic positioning. The Committee may further adjust total payouts up or down based on this assessment.

Based on its assessment of our performance for the year relative to the pre-established goals, the appropriate effect of any of the strategic adjustment factors and any individual performance adjustments, the Compensation Committee makes a decision on the actual bonus to be paid to each non-expatriate policy-making officer for the year, which may be less, but not more than, the stockholder-approved formula would produce. Typically, this amount will range from zero to 200% of the pre-established target for any individual policy-making officer position. The Compensation Committee bases these decisions in part upon recommendations made by the Chief Executive Officer and the named executive officers’ superiors, if not the Chief Executive Officer.

Performance Year (2003)⁽¹⁾
2006 Awards

Stock options granted under the Year 2000 UnionBanCal Corporation Management Stock Plan

        The following table provides information regarding awards made during 2003 are performance-based and deductible under the tax code. Awards under the 1997 UnionBanCal Corporation Performance Share Plan and under the Union Bank of California Senior Executive Bonus Plan also qualify as performance-based compensation and are deductible. To qualify as performance-based, both the 1997 UnionBanCal Corporation Performance Share Plan and the Union Bank of California Senior Executive Bonus Plan must be approved by stockholders periodically. The Amended and Restated 1997 UnionBanCal Corporation Performance Share Plan and the Union Bank of California Senior Executive Bonus Plan were submitted to and approved by stockholders on April 26, 2006. Grants of restricted stock under the Year 2000 UnionBanCal Corporation Management Stock Plan are not considered performance based and are therefore not deductible to the extent the $1 million annual limit is exceeded.

We intend to establish and administer executive officer compensation programs that are deductible. However, we may award compensation from time to time that is not fully tax deductible if we determine that such awards are consistent with our philosophy and in the best interests of our stockholders.

Section 409A of the Internal Revenue Code provides that amounts deferred under nonqualified deferred compensation plans are included in an employee’s income unless specified requirements are met. If these requirements are not met, employees are also subject to an additional income tax and interest penalties. Our nonqualified deferred compensation plans are intended to meet, and will be amended to meet, these requirements. As a result, our employees will be taxed when the deferred compensation is actually paid to them and we will be entitled to a tax deduction at that time.

Section 280G of the Internal Revenue Code disallows a company’s tax deduction for what are defined as “excess parachute payments” following a change of control, and Section 4999 imposes a 20% excise tax on any person who receives excess parachute payments. As discussed in the Other Potential Post-Employment Payments section of this proxy statement, the named executive officers are entitled to certain payments upon termination of their employment, including termination following a change of control of our company. Under the terms of the change of control agreements, the named executive officers (as described below in “Executive Compensation¾Other Potential Post-Employment Payments”) are entitled to tax gross up payments for the excise tax in the event that the aggregate value of all covered payments exceeds the maximum amount which can be paid to the executive without the executive incurring an excise tax; however, the tax gross up payment will not be made to the named executive officers, withofficer unless the numberpayments exceed 110% of the payments that could have been made to him or her without the imposition of an excise tax.

Our stock awards accelerate in the event of a change of control and qualifying termination of employment. This acceleration could contribute to potential excess parachute payments.

Accounting Considerations

Stock options, restricted stock, and performance shares awardedare accounted for based on their grant date fair value, as determined under FAS 123R. We consider the Plan,accounting expense as well as the applicable performance period,cash expense of all programs as part of our design and the number of shares under the award (target and maximum amount). In 2003, officers who are expatriates, including thereview criteria.

Policy on Expatriate Compensation

Historically, our Chief Executive Officer, Chairman of the Board the former Chairmanand some of our executive officers and directors have been recommended by The Bank of Tokyo-Mitsubishi UFJ, our majority stockholder. We refer to these executive officers and directors as expatriates because they serve or served previously as employees, executive officers and/or members of the board of directors of The Bank of Tokyo-Mitsubishi UFJ, their home country is Japan and, unless they have fully retired from The Bank of Tokyo-Mitsubishi UFJ, they are expected to return to The Bank of Tokyo-Mitsubishi UFJ after their service at UnionBanCal. All of our executive officers, including expatriates, are appointed by our Board of Directors, and all of our directors, including expatriates, are elected by our stockholders at our annual meetings, and in the case of a vacancy, may be initially elected by our Board of Directors.

In 2006, the following expatriate policy-making executive officers were either current or retired executive officers of The Bank of Tokyo-Mitsubishi UFJ:

·       Mr. Morimura, President and Chief Executive Officer and the DeputyDirector,

·       Mr. Shimura, Chairman of the Board wereand Director, and

·       Mr. Oka, Vice Chairman of the Board and Director.

In February 2007, the Board of Directors elected Norimichi Kanari to succeed Mr. Shimura as Chairman. Also in February 2007, Mr. Morimura announced that he will resign as President and Chief Executive Officer of UnionBanCal effective May 24, 2007 and Mr. Tanaka was appointed by the Board of Directors as President and Chief Executive Officer of UnionBanCal effective May 24, 2007. Mr. Kanari’s and Mr. Tanaka’s professional background and experience are discussed under “Election of Directors¾Nominees.”

The compensation and other benefits paid to expatriate officers are determined in keeping with the policies and practices of The Bank of Tokyo-Mitsubishi UFJ and our service agreement with The Bank of Tokyo-Mitsubishi UFJ. Under the service agreement, we pay a portion of each expatriate officer’s base salary directly to the officer and the remainder, which we reimburse, is paid by The Bank of Tokyo-Mitsubishi UFJ. As with all policy-making officers, our Compensation Committee approves the compensation and other benefits of expatriate officers.

Expatriate officers are not eligible to receive bonus awards under our Senior Executive Bonus Plan or Senior Management Bonus Plan, grants of options or restricted stock under our Year 2000 UnionBanCal Corporation Management Stock Plan or grants of performance shares under our Performance Share Plan awards. Please referPlan. In addition, expatriate officers are not eligible to participate in our retirement or supplemental retirement plans.

Under the service agreement, we either provide directly to the expatriate officers, or reimburse The Bank of Tokyo-Mitsubishi UFJ for, the following benefits, if incurred, which expatriate officers are eligible to receive under The Bank of Tokyo-Mitsubishi UFJ programs:

·       housing allowance for overseas assignment, including, in some instances, leasing of company-owned residences at market rates,

·       U.S. state and federal taxes on compensation and benefits, including tax gross-up amounts because compensation for expatriates is made net of U.S. taxes,

·       medical insurance, expenses, leave and travel arrangements (including family),

·       family allowance for family members remaining in Japan,

·       educational allowance for family members in the U.S.,

·       family travel and relocation expenses,

·       relocation benefits, including travel and shipping arrangements,

·       home leave travel and related expenses,

·       maid, gardening and security services for their temporary U.S. residences,

·       company car,

·       club memberships, and

·       tax planning services.

The Bank of Tokyo-Mitsubishi UFJ may provide to expatriate officers life insurance premiums, a portion of medical insurance premiums in Japan (including family) and storage space in Japan while they are serving at UnionBanCal. We do not reimburse for these amounts. The Bank of Tokyo-Mitsubishi UFJ has a retirement program under which its executive officers may be paid a lump sum at retirement based on years of service as an executive officer of The Bank of Tokyo-Mitsubishi UFJ, title and other practices and policies of The Bank of Tokyo-Mitsubishi UFJ. This amount is paid entirely by The Bank of Tokyo-Mitsubishi UFJ. Although we neither pay nor reimburse The Bank of Tokyo-Mitsubishi UFJ for these payments, The Bank of Tokyo-Mitsubishi UFJ takes into account the time expatriates serve at affiliated companies, such as UnionBanCal, when considering retirement payments. The retirement payments do not accrue over time and they do not vest. Rather, a one-time lump sum payment is made at the discretion of The Bank of Tokyo-Mitsubishi UFJ’s board of directors at the time of the executive officer’s retirement and is additionally subject to shareholder approval in Japan during the year it is proposed to be paid. Any retirement payment from The Bank of Tokyo-Mitsubishi UFJ associated with service to UnionBanCal is therefore uncertain and contingent. Accordingly, we do not report any amount associated with any potential future retirement payment to expatriate officers by The Bank of Tokyo-Mitsubishi UFJ.

All reportable compensation provided in 2006 to expatriate officers named in this proxy statement attributable to service to us, whether we or The Bank of Tokyo-Mitsubishi UFJ pay, and whether or not we reimburse for them, is reflected in the Summary Compensation Table or Director Compensation Table, as applicable. While Messrs. Shimura and Oka were not named executive officers based on 2006 compensation, Mr. Shimura’s compensation as a full-time employee of UnionBanCal is reflected in the 2006 Director Compensation Table. Generally, compensation received by expatriate officers directly from The Bank of Tokyo-Mitsubishi UFJ is denominated in Japanese Yen and, as a result, exchange rate fluctuations may yield differing dollar denominated compensation levels from year to year. In this proxy statement, all compensation has been reported in United States dollars. As discussed in further detail above, The Bank of Tokyo-Mitsubishi UFJ provides some compensation directly to the expatriate officers and directors. The compensation and benefits information with respect to expatriates reported below and in “Director Compensation” is based on information provided to us by The Bank of Tokyo-Mitsubishi UFJ.

Chief Executive Officer

As discussed above, as an expatriate officer, the compensation and other benefits we paid to our Chief Executive Officer, Mr. Morimura, while approved by our Compensation Committee, were recommended by and in keeping with the policies and practices of The Bank of Tokyo-Mitsubishi UFJ. The Compensation Committee believes that Mr. Morimura’s past performance and his long-term relationship with The Bank of Tokyo-Mitsubishi UFJ demonstrated ample motivation and indirectly tied Mr. Morimura’s compensation to the performance of UnionBanCal from year to year. The Compensation Committee also reviewed Mr. Morimura’s compensation in comparison with peer group chief executive officers. On February 28, 2007, Mr. Morimura announced that he will resign as President and Chief

Executive Officer of UnionBanCal effective May 24, 2007 and Mr. Tanaka was appointed by the Board of Directors as President and Chief Executive Officer of UnionBanCal effective May 24, 2007.

Non-Employee Expatriate Directors

Expatriate directors who are not officers of UnionBanCal, such as Mr. Miki, do not receive any retainers or meeting fees from us or The Bank of Tokyo-Mitsubishi UFJ for service on our Board. Effective February 2007, the Board elected Mr. Kanari to serve as Chairman in the capacity of a non-resident, non-executive officer. Mr. Kanari does not receive any retainers or meeting fees from us or The Bank of Tokyo-Mitsubishi UFJ for his service on our Board. If elected at the annual meeting, Mr. Omori will not receive any retainers or meeting fees from us or The Bank of Tokyo-Mitsubishi UFJ for service on our Board. Business travel expenses to attend board meetings are paid or reimbursed by The Bank of Tokyo-Mitsubishi UFJ to non-employee expatriate directors and are not reimbursed by us.

Executive Compensation & Benefits Committee Report

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis set forth in this proxy statement with our management; and

Based on Executivesuch review and discussions the Compensation for additional information.Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into our 2006 Annual Report on Form 10-K.

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The following tables should be read in conjunction with the narrative discussion that follows the Grants of Plan-Based Awards Table.

2006 Summary Compensation Table